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How Much Money Do I Need for a Down Payment on a New Home?

When you’re ready to buy a new home, you’ll need to put money into a down payment in order to get a home loan.

But how much money do you really need? That depends on a few factors, including the size (and type) of loan. Different mortgages require a higher (or lower) down payment.

Here’s a quick primer with all the basics you need to know about making your first down payment.

A down payment secures your loan with the lender.

The down payment is the amount of cash you’ll need to pay upfront during the home buying process. This helps secure your loan with the bank or lender.

Most home loans require you to pay 5%-20% of the home’s value as a down payment.

For most conventional, fixed 30-year mortgages, you will be required to pay 5%-20% of the home’s selling price upfront in order to get the loan. (Remember, this does not include closing costs, which you may also need to pay upfront.) So for a $200,000 home, expect to pay between $10,000-$40,000 in a down payment.

It’s better to make a bigger down payment—if you can afford it.

Paying a higher down payment upfront is to your advantage—because you will save money over the long term by paying less interest and lower monthly payments. In fact, if you can afford to put 20% down, then you may be able to avoid paying mortgage insurance altogether—a monthly fee that many lenders require you to pay until you build up enough equity in the house. Bottom line? If you can afford to pay 20%, then do it.

FHA loans require a lower down payment.

You can also get a loan from the Federal Housing Administration (called an “FHA loan”). This loan requires only a 3.5% down payment, but has stricter guidelines for income, assets, credit score, and home value. (You can also look for state and local mortgage assistance plans.)

The VA and USDA also offer lower down payment loans.

There are special home loans available for people who are active military duty, or veterans, or living in a federally designated rural area. In some cases, these loans require a 0% down payment. If you think you qualify, ask your lender about the requirements.

Jumbo home loans usually require a 10% down payment.

If you live in a high-cost housing market, you may need a “jumbo loan.” There are 3,143 counties in the U.S. that meet the jumbo loan criteria, including several in the Kansas City metro area. Jumbo loans typically require a minimum credit score of 700, so talk to your lender about whether you qualify for this type of loan.